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Oakland County Probate & Estate Administration Law Blog

Things people get wrong when preparing an estate plan

The process of creating an estate plan may seem like a cut and dried kind of endeavor. However, there are aspects of an estate plan that people commonly get wrong or disregard altogether. It is important for Michigan residents to understand the mistakes of others to ensure they are on the path to comprehensive estate planning for themselves and their family.

Perhaps the biggest mistake or misconception is the belief that people just don't need to create a will or start the process yet. It is reported that 64 percent of people don't have a will at all. It is recommended that anyone over 18 should have a will just to make things easier on loved ones in the event of an accident. It doesn't matter how much someone has financially -- anyone with a bank account should have a will.

A special needs trust may be ideal for some situations

Families can be complicated, and the individual needs of family members or other beneficiaries may be just as complicated. This means that each family may have specific and very different needs as they move forward with the estate planning process. For some Michigan families, the creation of a trust, specifically a special needs trust, may be a viable option for overseeing the care of a loved one.

A trust is essentially funds set aside for distribution to a beneficiary, based on specific directions or stipulations. The trust is overseen by a party who has been designated to release and manage the funds according to the wishes of the grantor. A special needs trust is a specific type of trust that ensures a loved one with special needs is cared for according to the wishes of the person leaving the funds behind.

Inheritance solutions for estranged children in Michigan

When it comes to leaving assets to beneficiaries, the process can be difficult for families if there are estranged children or strained family relations to be considered. For Michigan families, there are creative solutions for dealing with how to leave an inheritance to estranged children. While leaving that person out of the estate plan is always an option, there are times when that can make the process more complicated rather than simpler.

Families becomes estranged for all sorts of reasons, and this can leave parents at a loss over what to do about an inheritance. Some common reasons parents may not want to simply leave assets to adult children can include drug and alcohol issues. Some other reasons may pertain to bad relations with the spouse of an adult child or illegal lifestyles and habits.

Estate plan needs vary for childless couples in Michigan

Oftentimes, when people think about beneficiaries of assets and funds, they may automatically think about parents leaving an estate to be split between children. However, for Michigan couples and individuals without children, the process of crafting an estate plan may be slightly different. It may require some more thought regarding beneficiaries than for those who have children and who simply plan to leave all assets to those children.

One estate planning tool a childless couple or individual may want to invest in is long-term care insurance. This can help those who foresee the need for assisted living or even an adult day care situation who may not be covered by traditional insurance, as this kind of care can be extremely costly. Another means of covering this kind of expense may be the creation of a trust.

Finding out more about a trust is important

There are many options for estate planning and no one plan will work for everyone. However, regardless of the size of the estate, a trust may be a good idea to consider. For anyone in Michigan who is venturing into estate planning, learning about the different types of trusts can help a family determine what may be the best course of action for them.

Individual needs and expenses may determine the type of trust that is best. One type that is common is a minor children’s trust. This is meant to provide for the needs of minor children. A generation skipping trust is a great option for grandparents who want to leave funds to grandchildren.

Estate plan mistakes of James Gandolfini may be lesson for others

Oftent, people think those who have a great deal of assets must have all of their estate planning ducks in a row. However, the death of Soprano's star James Gandolfini showed that not everyone has taken the necessary steps to ensure that a comprehensive estate plan is in place. Because Gandolfini had a will, the details of his estate plan were made public. Anyone in Michigan who has yet to make an estate plan may be able to learn from his reported mistakes.

One mistake Gandolfini reportedly made was that he never truly finished the estate-planning process. He started to make plans when his daughter was born. However, after his death, his will did not include property he owned. He may have started to plan his estate and fate of his assets, but he had never finished prior to dying suddenly.

Tips for how Michigan residents should not estate plan

Every estate plan is different. Despite the size of an estate or the value of any assets, an estate plan is pretty much the same process for all Michigan residents who want to protect their family and also protect all for which they have worked. For those who have not started or who have devised an estate plan years ago, there are some important tips about what not to do.

One vital tip is to not select the wrong beneficiary. In some high-profile cases, a person of considerable wealth has chosen a beneficiary who has developed money problems or even substance abuse problems that made their ability to handle an estate responsibly quite questionable. Also, some have chosen a beneficiary and not updated the plan -- meaning that a beneficiary listed is someone who is already deceased, further complicating the estate-administration process.

Estate plan of The Velvet Underground's Lou Reed made public

Whenever a celebrity dies, the news is typically flooded with every last detail of their demise. Then, details about the value of their estate may be made public also. One way to avoid having these details made public is for celebrities or others who have a high value estate to have a trust created rather than a will. Anyone in Michigan who is concerned about their estate plan may want to learn more about the difference between a trust and will and why some think Lou Reed handled this issue wrong.

Lou Reed’s estate is estimated to be worth $30 million. A will that has been processed through probate states that the singer left his wife 75 percent of the estate. He left the remaining 25 percent to his sister. He also left a cash amount to his sister for the sole purpose of providing care for their elderly mother.

Michigan families may find inheritance less than expected

The entire estate-planning process can be tricky for families to navigate. It may be challenging for an elderly family member or spouse to disclose assets and financial information to the people to whom they may be closest. However, the more transparency there is when it comes to an inheritance and estate planning, the better Michigan families may be prepared to deal with estate planning and estate administration.

One area that may be difficult and require openness is the location of funds. Offshore or secret foreign accounts can spell trouble for those unfamiliar with the process. A significant chunk of the money may also be needed to pay penalties and fees for accessing the money. The more a family knows about these types of accounts, the better prepared they may be to distribute assets among family members.

Drawing up a will could alleviate future stress in Michigan

Broaching the topic of estate planning can be somewhat uncomfortable for many people. However, it is better to have these plans in place long before they are needed in order to ensure that end-of-life decisions are handled accordingly. Estate planning covers various subjects from creating a will to appointing a power of attorney, and these decisions should not be made hastily.

Some Michigan residents may avoid thinking about making these plans because they fear that the process will be long and complicated. Luckily, drawing up the proper documents can be less stressful if an individual has information on how to do so. Certain circumstances such as multiple marriages and the number of children could potentially lead to more difficult decisions, but understanding the importance of these plans could help parties appoint the right individuals.

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